Financing Focus

Savvy Gifting

A case study about how donating property to the CCIM Foundation gives back to those involved.

The charitable gifting of real estate can provide financial benefits to all parties involved: the donor; the recipient charitable organization; and the professionals involved in handling the transaction. This occurred recently when Richard Juge, CCIM, SIOR, learned of the potential tax deduction that he could obtain by donating real estate he owned in Haynesville, La., to the CCIM Foundation.

“I owned a vacant property that had been on the market for some time,” says Juge, chief executive officer for RE/MAX Commercial Brokers in Metairie, La., in the New Orleans metro area. “Instead of keeping it on the market, I decided to donate it for a tax deduction. I contacted the CCIM Foundation to determine its interest.”

Upon making that contact, the CCIM Foundation began its review process, which is used every time a real estate donation is offered to the Foundation. The process involves a preliminary review by its real estate gifting team headed by Duncan Patterson, CCIM. 

The process begins with a signed letter of intent from the donor, stating a willingness to give property to the Foundation. Then a real estate broker's opinion of property value is obtained, and a real estate questionnaire is completed. Questions asked include the type of property; whether it has a mortgage or if there are liens and encumbrances on it; whether there are leases; and questions about environmental issues.

The real estate gifting team reviews the proposed gift and information, and decides whether it is a gift the Foundation may be interested in accepting. If it is, the information is presented to the Foundation's Board of Directors for approval to move forward and commence due diligence.

Costs typically are involved in the due diligence process.  As a result, a donation agreement must be signed by the donor for the Foundation to proceed. The donation agreement commits the contributor to transfer the property to the Foundation at the option of the Foundation.

The Foundation's due diligence process includes title review; environmental reviews; reviews of lease agreements, if applicable; and other steps as outlined on the website for the real estate gifting program at www.realestategifting.org.

It is during this step that a local real estate professional markets the property under the terms of the donation agreement.

For the property donation from Juge, Patterson worked with Mike Stinson, CCIM, of Saurage Rotenberg Commercial Real Estate LLC, in Baton Rouge, La. Stinson found a buyer for the property, so when it transferred from Juge to the Foundation, it could be sold to the buyer.

“This was a classic example of a charitable gift being the most beneficial way to dispose of the property,” Patterson says. “The economy of Haynesville had declined and has not fully recovered. Additionally, the growth being experienced was on the other side of the town.” 

According to Patricia Tesluk, CCIM, the 2016 CCIM Foundation president, “It was extremely generous of Richard Juge to donate property to the CCIM Foundation. The proceeds, upon sale, are being used to support the Foundation's ongoing programs, which include more than 100 named and endowed scholarships for those pursuing the CCIM designation. These scholarships range from assistance for the costs to take CI 101, CI 102, or CI 103 courses, to covering the costs of the exam review and final CCIM designation exam.”

Since these donations and their tax deductibility are governed by the Internal Revenue Code, both Juge and the Foundation were required to submit the appropriate forms to the IRS. The property donation provided Juge with a tax deduction for the property's appraised value, as certified by an independent appraiser, and supplied funds to the Foundation.

This is clearly a real property donation, with multiple benefits for all those involved.

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Mary Stark-Hood, JD, CFP

Mary Stark-Hood, JD, CFP, is president of the Hood Group, Inc., and serves as a consultant to the CCIM Foundation. Contact her at maryshood@comcast.net

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